Hot Starts

To stand out among the 3,000 franchise opportunities in today's uncertain economy, aggressive concepts are courting prospects with special incentive and stimulus packages--such as Papa John's, Cafe2U, Budget Blinds, Kitchen TuneUp, Red Mango, and Discover Rental Purchase.

There's a saying I've heard in business and the franchise community for years: "Either your system is growing, or you are slowly going out of business and just don't know it yet." These days, everyone's singing the "Bad Economy Blues." Unfortunately, this sentiment can become contagious within franchise systems. So what can franchisors do to help their franchisees sustain and grow, and to maintain happy franchise systems in these difficult times? Or at least, what can franchisors do to circle the wagons and avoid franchisee attrition? Attrition is a franchisor's worst enemy as failed and/or closed units reduce royalty income, render some support staff obsolete, and wreak havoc with franchisee validation.

On a recent monthly Webinar for the Franchise CEO Network, I was honored to interview Rhoda Olsen, president and COO of Great Clips, Inc. Quickly, the conversation turned to what it is like to lead more than 2,800 Great Clips franchisees, and the challenges that must be overcome to communicate effectively.

Why would both a franchise capital finance company and the CEO of a retail franchise brand sign on as franchisees of a new concept? That's what Siegel Financial Group and Gabriel Bottazzi, CEO and founder of Bijoux Terner, have done. They are among the six franchisees who have signed on with RetroTax. Part of the reason, both say, is that it's a great concept. RetroTax, as the name implies, finds tax credits for both franchisors and franchisees--and gets paid as a percentage of what they find.

Earlier this year, I had the opportunity to attend Franchise Update's annual Multi-Unit Franchising Conference in Las Vegas. I sat on a panel of experts in a session titled "Development Strategies: Accelerating Growth Through Area Representation." During this session, the advantages and disadvantages of area representation (AR) were discussed. As the session concluded, there appeared to be a few franchisors converted to the AR concept.

I was shocked recently while attending a workshop covering franchisee recruitment (formerly known as "franchise sales") by the participants' responses to the following situation: Assume that the franchisor says nothing in his Franchise Disclosure Document's Item 19 as to financial performance. Instead, the franchisor suggests that prospective franchisee prepare a business plan that would include a projection of revenues and costs for the proposed franchise.